Now in Lehigh Valley, Avantor hopes to grow into billion-dollar business

Peter Hall, Of The Morning Call

Two years ago Avantor Performance Materials was headquartered in the aging New Jersey building it had occupied for half a century, with some of its people working in office trailers and others at a remote site miles away.

Today, relocated to Upper Saucon Township's Stabler Corporate Center, the specialty-chemical maker is positioned to capitalize on its expertise serving the growing pharmaceutical and biotechnology industries and manage a global network of research and production facilities from the Lehigh Valley.

"I really do think we have the infrastructure here to manage a company twice our size," said President and CEO John Steitz, who took over leadership of the 109-year-old company in August.

Steitz, whose background in the specialty-chemical business goes back to summer manufacturing jobs as a college student, said he hopes to see the company double its revenue and triple its earning in the next three years.

Owned by the New York private equity firm New Mountain Capital, the company does not disclose its financial performance, but a spokesman said Avantor's revenues are in the $500 million range.

Central to the company's growth is a plan to deploy software that will allow Avantor managers to view real-time data for its facilities in the United States, Mexico, Europe and the Far East.

"You can have a daily global snapshot of your sales, volumes, how your costs are doing, how your expenses are doing. How your inventory is doing, the accuracy of that inventory," Steitz said.

Despite a setback when the rollout of Avantor's enterprise resource planning software this past summer turned out to be a "disaster," according to the company's lawsuit in New Jersey federal court against consultant IBM, Steitz said the company's worldwide operations should be connected by the end of the year.

"I think as we integrate that system globally, we will have a chassis … on which to build this company for many, many years to come," Steitz said.

Founded as J.T. Baker in 1904, the company began as a producer of high-purity laboratory chemicals and branched into the pharmaceutical products industry through a series of acquisitions by Proctor & Gamble in 1985 and St. Louis-based Mallinckrodt Inc. in 1995.

The company's most recent purchase by New Mountain Capital in 2010 saw its name change from Mallinckrodt Baker Inc. to Avantor and paved the way for its acquisition of manufacturing, packaging, research and distribution facilities in Mexico and Poland.

Steitz said Avantor is in negotiations to acquire two more companies in North America, one of which has global reach that would help Avantor expand its product line to serve the biotech industry. Steitz would not identify the companies.

To accommodate that growth, Avantor's last CEO Jean-Marc Gilson visited several sites, held meetings with managers and even numerically graded potential locations, factoring in issues like cost and effect on the workforce.

He settled on a 59,000-square-foot building in the Stabler Corporate Center that had been reserved for vaccine giant Sanofi Pasteur, arriving in September 2011. As an enticement to make the move, Avantor also received a $3 million state grant in addition to $600,000 in job creation tax credits, a $200,000 opportunity grant and $90,000 in job-training assistance.

The modern three-story building features an airy lobby, spacious offices with open floor plans and glass partitions that spokesman Gene Nichols said foster problem solving and collaboration.

In Avantor's customer service department, large flat-panel screens display data for quick reference by representatives. And employees have the use of amenities like Keurig coffee machines in spacious break rooms on each floor and a fitness center and locker rooms.

Steitz said the new headquarters provides conference space to meet with visiting employees and partners from across the country and around the world. Its location in Center Valley provides convenient access to major metro areas including Philadelphia and New York and a good quality of life in the Lehigh Valley for the company's 200 employees based here, he said.

Avantor employs 731 in the United States and more than 1,700 worldwide.

In addition to its original business producing chemicals for research, academic and quality-control labs, Avantor manufactures chemical tests and instruments used in medical diagnosis and solutions used in the production of computer chips, light-emitting diodes and flat-panel displays.

Among Avantor's pharmaceutical products are materials that are added to a drug to facilitate its delivery. These include compounds that aid in the manufacture of tablets by ensuring the material moves smoothly through machinery and those that help the tablet to dissolve in a patient's stomach, actually delivering the drug to his or her body.

"We play in that market a little bit," Steitz said.

But Avantor's biggest focus is on the biotechnology industry, where companies like Chester County-based Amgen are working to use science of cellular biology and DNA to grow molecules that can reverse or prevent diseases rather than simply treating the symptoms.

"You have to feed those cells, and like our bodies, it takes salt, sugar, protein," Steitz said.

And that's where Avantor draws on the strength of its century of experience producing ultra-pure chemicals, Steitz said. The salt, sugar and protein used in biotech applications that will eventually be used to treat humans must also be ultra-pure.

"That's what we do really well," he said.

Avantor's range of business lines also gives it a strong position in the growing industry.

"We can supply the laboratory and we can supply all the way through commercial production of these compounds because of the breadth of this business of ours," Steitz said.

A recent acquisition in Mexico and a partnership in India also give the company a strong position in growing markets. Steitz said he's hopeful Avantor's facilities in Mexico City will allow it to break into Latin American markets.

Steitz said Avantor's distribution of manufacturing facilities around the world also gives customers who rely on the company for raw materials peace of mind.

And the company's track record with the pharma and biotech industries in the United States give it the ability to quickly clear regulatory hurdles elsewhere, Steitz said.

With its physical presence around the world and expertise suited to serve growing industries, Avantor is poised to steer a growing global enterprise from Center Valley, Steitz said.